Buy Gold for Long Term as “Fiat Money Is Doomed”
By: Mark O’Byrne
GoldSeek.com
Monday, 11 September 2017
– Buy gold for long term as fiat money is doomed warns Frisby
– Gold’s “winning streak” will continue in long term
– September is traditionally a good month for gold, as we head into the Indian wedding season
– “It’s just a matter of time before gold comes good again…”
by Dominic Frisby, Money Week
Today folks, by popular demand, we’re talking gold.
It’s had a nice summer run.
What now?
Gold has been buoyed by the North Korea scare
Let’s start with an update. Back in July I suggested a flip trade: buy then in anticipation of a rally, sell in the autumn. But I also ventured that a proper, multi-year bull market in gold, such as the one we saw in the 2000s, was a way off.
The price then was $1,230 an ounce. As I write, we’re a couple of dollars shy of $1,340. We’ve had a $110 rally. Aren’t I a genius?
So what do we do now? Buy more? Sell? Hold?
Let’s have a lively debate.
The first observation I’d make is that a good $30 to $40 of today’s price is war premium. A certain North Korean has been firing missiles and exploding bombs. The world has, quite understandably, got nervous. And a certain American has been positing (with some justification) various potential responses on Twitter.
Is this North Korean affair going to die down and fade away, or is it going to escalate?
Regular readers of this column will be aware that I know the answer to most things, but I confess that here I fall short. This is something of which only a select group of informed North Korean insiders will have concrete knowledge.
But how this affair pans out will determine gold’s direction in the short term. If it escalates, gold goes up. If it doesn’t, then that $30 or $40 of war premium will be given back.
I’d wager that this is just noise, albeit rather scary noise, and that it will pass. But this is no more than a guess, and not even an informed one.
Aside from North Korea, over the last 45 years, September has proved a good month for gold, rising by an average of about 2.5%. The given reason for this is that gold buying increases as we head into the Indian wedding season, which runs from October to December. Indians are the biggest buyers of physical metals. About a third of global physical gold demand comes from India, half of which is spent on jewellery for their ten million weddings each year.
However, over the past five years, the reverse has been the case. September has been a bad month for gold with falls averaging around 1.5% for the period. That might be simply because we have been in a bear market. It might be because Indian gold-buying has been upset by various changes in legislation and new taxes, and is down some 10%-15% from the heady heights of 2010 and 2011.
Gold has the potential to roar higher – but it could easily stall, too
I was intrigued by this chart (chart above) from Jordan Roy-Byrne over at the Daily Gold. In the top pane you see the gold price since last 2009. In the bottom one you see the net speculative position of Comex traders.
The Rest…HERE
